Posted in:

Newfoundland Announces Offshore Top Bidders

Newfoundland’s latest offshore licensing round results were announced November 7. Although existing fields in the area are producing oil, there is significant gas potential too.

Canada-Newfoundland and Labrador Offshore Petroleum Board, the province’s upstream regulator, said that winning bids for five exploration licences raised roughly C$1.386bn ($1.05bn) from four firms.

In its eastern Newfoundland round, top bids for four licences were announced. Two were from Australia's BHP as operator with 100% stake: parcels 8 (269,799 hectares, C$621mn) and 12 (273,579ha, C201mn). The top bid for parcel 14 came from a joint venture of Norway's Equinor 70% as operator and Husky Oil 30% (159,036 ha, C$32.2mn), while that for parcel 15 came from Equinor 60% and operator alongside Suncor 40% (253,608ha, $480mn). The fifth licence was parcel 1 in the Jeanne d’Arc region covering 142,448ha where the top bid of C$52mn came from Suncor as operator with 40% with Husky and Equinor each 30%. Suncor and Husky are both headquartered in the western Canadian city of Calgary.

Upon receiving ministerial approvals, the regulator will issue the new exploration licences in January 2019.

The area offshore eastern Canada includes the Hibernia, Terra Nova, Hebron and White Rose fields that account for one-quarter of Canada's light oil production, plus the Bay du Nord oil find. But it also has significant gas potential.

A report published in April by the provincial government said that Newfoundland and Labrador’s offshore has 3.9bn barrels of discovered oil reserves/resources, of which 1.7bn bls have already been produced, but also has 12.6 trillion ft3 of natural gas discovered in the offshore which remains to be developed. The full results of the latest licence round can be seen here.

At least one Canadian east coast LNG export project, Pieridae's Goldboro, is under pressure to source more conventional – rather than onshore shale – gas feedstock, in order to wrap up its financing.

The April report also said that one of the province's objectives by 2022 is to "develop a natural gas development plan - with the discovery of additional resources, market opportunities for natural gas are anticipated" and also said it would "advance initiatives to ensure provincial readiness for gas commercialisation, including regulation, development models, local supply opportunities, and labour requirements; focus activity on attracting global investment for commercial gas production; and examine domestic utilization strategies for natural gas as a low-carbon fuel."